The Australian Dollar (AUD) advanced against the US Dollar (USD) for a fourth straight session on Wednesday after Australia released its first “complete” monthly CPI report. Inflation rose 3.8% year-over-year in October, beating expectations of 3.6% and the prior 3.5% reading. The stronger data reinforced expectations that the Reserve Bank of Australia (RBA) will maintain a cautious stance, with inflation still above the central bank’s 2–3% target range. RBA officials acknowledged a slight uptick in unemployment but maintained that the labor market remains resilient.
RBA outlook remains steady
Minutes from the RBA’s November meeting signaled that policymakers may leave the Official Cash Rate unchanged for an extended period. Futures pricing supports this view, with the ASX 30-Day Interbank Cash Rate Futures indicating only a 6% probability of a December cut to 3.35% as of November 25.
USD softens as Fed easing bets increase
The US Dollar Index (DXY) trades around 99.80 after modest losses, pressured by expectations that the Federal Reserve will cut rates in December. Market pricing via the CME FedWatch Tool now reflects an 84% chance of a 25 bp cut – up sharply from 50% a week earlier.
Recent US data has reinforced the dovish shift: headline PPI held steady at 2.7%, while core PPI eased to 2.6%, missing expectations. Retail Sales rose just 0.2% in September, down from August’s 0.6%, and consumer confidence dropped sharply to 88.7 – a seven-month low. Fed officials, including Christopher Waller, John Williams, and Stephen Miran, have all signaled support for near-term easing, citing labor market softness as the key concern.
Australian pmis support domestic outlook
Australia’s November PMIs also strengthened, with Manufacturing PMI rising to 51.6 from 49.7, Services PMI ticking up to 52.7, and Composite PMI improving to 52.6. RBA commentary has emphasized the need to monitor labor market trends and warned that strong economic growth could reignite inflation pressures, though officials continue to downplay the impact of any single month’s inflation data.
Technical outlook: AUD/USD eyes 0.6500
AUD/USD trades near 0.6480 and remains confined within a rectangular consolidation pattern on the daily chart – a structure that signals a neutral broader bias. Short-term momentum remains subdued as the pair sits just below the nine-day EMA at 0.6479.
A decisive break above this EMA would open the door toward the 0.6500 psychological level. Further strength could see AUD/USD retest the upper boundary of the rectangle near 0.6630.
On the downside, immediate support rests near 0.6420, followed by the five-month low at 0.6414 from August 21.
